Deadweight loss is the lost gains from trade caused by a market inefficiency such as a tax imposed by the government. For example, if the government imposes a $1 tax on key chains, some transactions that would have occurred without the tax will no longer take place, resulting in lost economic value to both buyers and sellers. The amount of deadweight loss depends on the price elasticity of demand - the more elastic the demand, the greater the deadweight loss from a tax.